SodaStream warnedthat third-quarter revenue would come in around $125 million, far below the $153.6 million that analysts expected. The company specifically cited weakness in the U.S. for its systems, which allow you to carbonate and flavor your own soda blends at home.

I’ve seen the company’s countertop machines at stores like Bed Bath & Beyond, and frankly I never understood the purpose of ’em. They’re overpriced, for one thing. For another, we just didn’t have room for yet another appliance on our cluttered kitchen counter top.

But the story here is bigger than SodaStream. It’s a story of just how dangerous those infamous “Fad Stocks” can be! You probably remember I wrote about King back in August after its shares plunged 23 percent. The problem? Revenue missed forecasts, and gross bookings guidance disappointed investors.

There are few things more faddish than Candy Crush, the tablet and smartphone game that many people have just grown tired of. But it looks like the “Gee, isn’t it exciting to make your own soda at home?” fad has also passed its peak.

How much money has SodaStream cost investors as a result? Well, the shares were already down to just over $27 yesterday from around $50 at the beginning of the year. Including today’s shellacking, they’ve now lost a whopping 72 percent from their mid-2013 fad peak!

Is there anyone else out there who’s vulnerable to the same fate? GoPro (GPRO, Weiss Ratings: C) is one I’d be worried about over time — if not in the immediate future. Everyone and his sister is using the company’s water-resistant, shock-resistant equipment to film crazy stunts and adventurous vacations right now — and paying through the nose for the right to do so.

What will be the next fad to disappoint investors?

But how many skydiving and extreme kayaking videos can you upload to YouTube before you get tired of it? And as cheaper competition comes online, how many people will still be content to shell out a few hundred bucks for a top-of-the-line GoPro camera? Just something to consider since the stock has already surged from around $40 in August to almost $100 a few days ago.

So what do you think?

Have you made money from fad stocks before? Or do you avoid them as a general rule? Is GoPro doomed to suffer the same fate as SodaStream, with disastrous results for investors? Or will it ride the video filming craze for a few more years, then maybe get bought out by a larger firm to reward investors with even bigger profits? Hop on over to the comment section to add your two cents!

Our Readers Speak

The breakup of lumbering giant Hewlett Packard (HPQ, Weiss Ratings: B) … as well as the bigger issue of boosting results through financial engineering … prompted a couple of lively discussions on our website.

With regards to spreading the wealth between Wall Street investors and Main Street employees, Reader Philip W. said: “One way to combine both would be to have the employees of the company be the shareholders; then all the investment in buybacks and dividends would go to the employees.

“In addition, their ideas would be listened to as shareholders, so money could then be invested in more and better items for the business. The cycle would complete itself as money earned would then flow back to the shareholders (employees), and begin again.”

“Is GoPro doomed to suffer the same fate as SodaStream?”

Reader John also weighed in on the relative merit of distributing money to shareholders versus re-investing in the business. His take: “The idea of shareholder first — what does that mean? Isn’t the best thing a company can do with capital is expand its business and make it even more successful that it’s been in the past? To me that IS putting shareholders’ interests first.

“It’s especially true if companies can gain critical advantages such as economies of scale or strategic position that turbo-charges profits even beyond just getting bigger. So yes I agree with your lament that corporations seem lately to lack imagination, gumption or both.”

Thanks for your input, gentlemen. I agree that there’s nothing wrong with distributing money to shareholders via dividends. I like juicy yields as much as the next investor! But the problem is that too much money seems to be flowing to payouts and buybacks versus business investment. That puts future profits and competitiveness at risk.

Meanwhile, Reader Saranjeet S. had an interesting take on corporate spin outs. He noted the example of Imperial Chemical Industries of the U.K., which separated its commodity chemicals and paints businesses from its pharmaceutical/crop-care divisions. The pharma business is now the successful AstraZeneca (AZN, Weiss Ratings: C+). The chemical business faltered. His view?

“The latter got destroyed due to incompetent leadership, which made a bad acquisition. In fact, with the benefit of hindsight, if they had split the paint business from the heavy chemicals business, the paint business could be a world leader today.

“If HP is splitting its businesses due to different approaches required for the two parts, it might be worth considering the split, with one proviso: You need to ensure that the leadership for each component is appropriate and world class. This could well lead to two world class businesses. Otherwise, from my observation, one will survive and succeed whilst the other fails.”

“True engineering of materials and things creates wealth and there is too little of that going on. You can play with the money all you want, but if most people aren’t hired to make anything productive we’ll all eventually starve to death. And forget about trickle down theories. Bottom line: Too much greed and manipulation by those in high places is killing us all.”

• ISIS has overrun parts of the Syrian city of Kobani, according to reports. That’s drawing even more airstrikes from the U.S. and other allies, who don’t want the terrorist group to gain any more ground — especially in a town hard up against the Turkish border!

• Tougher anti-Ebola screening is coming to select U.S. airports. That’s an intermediate step that falls short of some calls to ban inbound travel entirely from the most heavily infected West African nations.

• Forget the sick man of Europe economic theory. The whole continent looks sick! The latest dismal data: Seasonally adjusted industrial production in Germany just plunged 4 percent in August. That was the biggest decline since 2009 — and almost triple the drop that economists were expecting

• Speaking of the economic risks emanating from Europe, the International Monetary Fund just slashed its global growth forecast for 2015. It lowered its projection to 3.8 percent from 4 percent, citing weakness in Germany, France, and Italy as well as geopolitical risks in places like Brazil and Russia.

Mike Larson graduated from Boston University with a B.S. degree in Journalism and a B.A. degree in English in 1998, and went to work for Bankrate.com. There, he learned the mortgage and interest rates markets inside and out. Mike then joined Weiss Research in 2001. He is the editor of Safe Money Report. He is often quoted by the Washington Post, Reuters, Dow Jones Newswires, Orlando Sentinel, Palm Beach Post and Sun-Sentinel, and he has appeared on CNN, Bloomberg Television and CNBC.

{11 comments }

ianTuesday, October 7, 2014 at 6:19 pm

It gaps up,it gaps down,Cant take the heat,get out of kitchen,get to the sidelines.Come on just looked at SODA chart,I would have dived out at $31 so no excuses please,please look at charts.Maybe harsh but its your money folks.Maybe I should start up a service to teach folks to read charts.Retire with $a million

Bob pTuesday, October 7, 2014 at 7:25 pm

buy gopro til xmas then short if not sooner.

ralph johnsonWednesday, October 8, 2014 at 9:25 am

maybe sooner if market teeters down and also christmas sales don’t reach predicted levels…….how many action/x-game/extreme sports are out there to buy these and use…. and true, who(eventually…) will have THAT much time to view/share exploits?

IreneTuesday, October 7, 2014 at 7:35 pm

All I ever saw was people complaining about SODASTREAM. Arguments like “people don’t drink soda” so why is Monster beverage stock at 90dollars. How about Coca Cola partnering with Keurig. That is the real reason Soda is down. Wall Street shorts WANT this company to fail so that Keurig could come out with its new soda machine. I love my Soda from SODASTREAM. it taste better than Coke and Pepsi. You don’t have to lug home soda cans or bottles from the grocery store. There is a lot more to this story than meets the eye.
This is my opinion only.

dr.donTuesday, October 7, 2014 at 10:03 pm

I have been short soda and tried to short gpro today but no available stock….another company that does not make sense is green mountain……it just goes to show how stupid and GULLIBLE the American people are….back to gpro…..since they have been in the spotlight watch for competitors to enter their same market……htc is one and their will be a couple more chinese to join the competition….so gpro will fall and fall hard probably in the next 6 to 14 months……patience…

Andrew Dice ClayTuesday, October 7, 2014 at 10:12 pm

Oh boy. I remember as a child(in the early 80’s)how me and my kid sister would play with this toy machine that made ‘slushies’ and water ice. I forget the name. It lasted 2 weeks. Then we had this mini oven where we could bake our own brownies and stuff. I forget the name also, but it was cool for a little longer then 2 weeks.
Sheesh! And this was in the early 80’s, loooooooong before any decent electronic gizmos started getting marketed, and we grew tired of these cool “toys” in short order.
I guess these investors never had these totally rad mini kitchen toy sets. Wow! I guess me and my sister had it really good after all! :)

RosalindrTuesday, October 7, 2014 at 10:55 pm

Soda isn’t a fad and the machine is a great idea. I’ve had one since 2009, before the Israelis took over the company from the Brits and changed the name from Soda Club to Soda Stream and went on a marketing binge.

It’s a great idea. No more lugging 2 lt. bottles of soda or six packs of cans. No more Jimmy wants Coke, Suzie wants Dr. Pepper. It really makes making soda so much easier. Personally I drink seltzer. I usually make two quarts a day.

Soda is dropping because it is made in Israel, and with the recent attacks on Gaza a lot of people are devesting anything Israeli. Even Scarlett Johansson was dropped from Oxfam because she was advertising Soda.

The company needs to move out of Israel and then they would get their business back. I’m holding on to my shares and buying more.

zzzzzWednesday, October 8, 2014 at 1:42 am

wow, anti-semitic or what. Are you an ISIS sympathiser too?

ralph johnsonWednesday, October 8, 2014 at 9:17 am

i think the key/critical issue with soda and gpro is, of course, timing their demise (or swing…). Surely soda will peter out and gpro will reach a sales plateau and followup decline in sales (thence revenues, thence price…). I have the hardest time figuring out when the largesse of stupid american consumers actually quit these fads….often they continue beyond my timing predictions. Recall when crocs topped out, then i shorted successfully when massive chinese import competitors flooded market and forced crocs way down…but somehow they responded well–due to less wear/quality of near competitors products and cCROCs sheer dtermination to expand lines and marketing efforts.
Honestly, when the evidence comes forth about how bad carbonated phosphated drinks (consumed in massive daily quantities…) are finally manifest enough to a dying (literally…) mainstream user base, then soda will be terminal. I never understood Kuerig econometrics on an individual consumer basis–nearly 2-300 % of what conventional drip/french press cup of coffee costs…..and certainly no better taste. But that marvel of rapture of techno-machine use and marketing-dictated convenience drove them to heights……wow-i still don’t get their per cup cost…..and the machine is about $100 +- still…wow…….never underestimate the ” collective ignorance factor” i guess. (as an equity trader….) Sure hard to know when public ever respond to what learning curve….god, madison avenue has to love their continuing post-war (ww2) prowess….

DanWednesday, October 8, 2014 at 10:20 am

So, what is the barrier to entry into the GOPRO type camera market? Seems like anyone could make one and quite a bit cheaper. Why not just get a waterproof case for your iPhone?

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